Free Trade with the U.S. has failed to close the income gap or create quality jobs

Thursday, April 12 2007 @ 09:06 AM MDT

Contributed by: jensonjFree Trade with the U.S. has failed to close the income gap or create quality jobs

by Jean-Yves LeFort

If you read any Canadian newspaper, you’ve been treated to the same refrain: NAFTA has been good for Canada. It has led to economic growth and jobs for Canadians. And given that it’s been so wonderful for Canada, the Security and Prosperity Partnership of North America (SPP) could only make things better, right?

What proponents of deep integration are not telling you is this: the notion that NAFTA has been good for average Canadians, Americans and Mexicans is a lie. The truth is that NAFTA has been responsible for growing poverty, the creation of a new underclass called the “working poor,” and the concentration of wealth in the hands of fewer and fewer people.

The numbers don’t lie

When political and business leaders sold Canadians on the merits of NAFTA, they promised that trade would boom, our economy would grow, more jobs would be created and our standard of living would skyrocket. In Mexico, politicians promised that free trade would lift people out of poverty. Look closely at the numbers, however, and all these promises begin to ring hollow.

A September 2006 study by the Economic Policy Institute (EPI) found that Canadian exports to the U.S. peaked in 2000 and started falling in 2001 and 2002. They have since risen again, but only because of a commodities boom particularly related to the minerals, forestry and energy industries.

In other words, if it weren’t for natural resources, especially oil, our exports to the U.S. would be falling steadily. Furthermore, a federal Industry Department study quoted by EPI reveals that 90 per cent of the export surge in the 1990s was a result of the low Canadian dollar.

In addition, Canada’s share of the American import market has stayed the same throughout the NAFTA years. So those who claimed that NAFTA would give us a “privileged” and growing access to the American market have been proven wrong. Canada is rapidly losing ground to India and China, two countries that have not signed trade deals with the U.S.

Exports don’t equal jobs

NAFTA’s proponents point out that Mexico has become the world’s eighth largest exporter. This, they say, is proof that free trade has been good for the Mexican people. But researchers at the Fletcher School of Law and Diplomacy at Tufts University recently concluded that foreign investment was “largely disconnected from the domestic Mexican economy.”

In other words, large corporations are exploiting a cheap labour force for quick profit. The products of this labour immediately leave the country as exports. This accounts for the high trade numbers but it is not an accurate reflection of Mexico’s economic strength. The country as a whole does not benefit from technology transfers or new infrastructure.